The Day the Supreme Court Laughed at Liberalism

One of the historical judgments about the Supreme Court striking down many of FDR’s early New Deal measures—especially the National Recovery Act and the Agricultural Adjustment Act (in an opinion written by a Justice named Roberts!)—is that these Court rulings actually helped FDR because it gave him a quick escape hatch from semi-socialist economic policies that had no hope of working. At the time the Court struck down the NRA in 1934, James MacGregor Burns noted in The Lion and the Fox, the NRA “was near administrative and political collapse” because of its “insuperable problems.” Kinda sounds like Obamacare, doesn’t it?

The National Recovery Act essentially tried to cartelize the economy, with government-administered price codes and production controls to keep wages and prices up. The Schechter case that brought down the NRA showed the full absurdity of the NRA with its peculiar facts that produced open laughter in the Supreme Court during oral argument. To prevent wholesalers of chickens from having to discount smaller chickens, the NRA codes prohibited people from selecting which chickens they wanted to buy; instead, if you wanted 10 chickens, you had to take ten more or less randomly grouped chickens in a coop. This was known as “straight-killing.”

Here’s how the transcript from the oral argument reads—see if this doesn’t remind you of the quality of thought behind the entire Obamacare enterprise:

Mr. Justice McReynolds: I want to see whether I understand [the arrangement] correctly. . . These chickens are brought into New York by the carload, and then they are taken out and put in coops? [Mr.Heller, arguing for the Schechters, says yes, and he further informs the Justice that there are thirty to forty chickens in a coop.] And if he undertakes to sell them [from the coop] he must have straight-killing?

Mr. Heller: He must have straight-killing. In other words, the customer is not permitted to select the ones he wants. He must put his hand into the coop when he buys from the slaughterhouse and take the first chicken that comes to hand. He has to take that.

[Laughter—recorded in the chamber.]

Mr. Justice McReynolds: Irrespective of the quality of the chicken?

[More laughter in the courtroom.]

Suppose it is a sick chicken? [He is told a buyer was free to reject a sick chicken.] Now can he break up those coops and sell them, half a dozen chickens to one man, and half a dozen to another man?

Mr. Heller: He cannot. He can sell a whole coop, or one-half of a coop. . . That is all. And when he sells five, or six, or two, or three, he cannot permit the purchaser any selection of the chickens in the coop.

Mr. Justice Stone: Do you mean there can be a selection if he buys one-half the coop?

Mr. Heller: No. You just break the box into two halves.

[Laughter in the courtroom.]

Mr. Justice Sutherland: Well, suppose, however, that all the chickens have gone over to one end of the coop?

[More laughter in the courtroom.]

It was Justice Sutherland’s question at the end of this passage that was the coup de grace for this cooped up nonsense. Schechter was decided against FDR by a 9 – 0 vote, so among the justices FDR attacked for their “horse and buggy” constitutional views was Louis Brandeis, the acme of Progressive liberalism. As Hadley Arkes notes in his splendid book on Justice Sutherland, “One thing I never learned in my reading about the New Deal was that when the clever young lawyers for the government sought to expound, in open court, the theories they were wrapping into the law, their account of the law elicited the giggling of the urbane.”

Which brings us to today, and the laugh-out-loud absurdity of the claims on behalf of Obamacare (“keep your insurance if you like it,” “bring down health care costs,” and other howlers). Like FDR and the early New Deal catastrophes, one common theme is that a Supreme Court decision against Obamacare ironically helps Obama, both politically and substantively, by giving him an escape hatch from this unpopular and unworkable law. Perhaps so, but if it follows the FDR precedent, it will also ensure that Obama lurches even further to the Left in a second term.

Obamacare and FDR’s National Recovery Act have many things in common, and one of the important similarities is that both attempted to buy off big business. Big business in 1933 generally liked the NRA; it was small business and competitive entrepreneurs—like the Schechters (loyal Democrats, as it happened)—who resisted the NRA. Obama took great care to buy off the health insurance industry and the pharmaceutical industry, though at the expense of medical device manufacturers (a more entrepreneurial and therefore more inherently competitive sector). One group that will join the Left in not liking a Supreme Court verdict against the individual mandate: Health insurers.

In the aftermath of the two Supreme Court decisions against the NRA and the AAA, James MacGregor Burns notes, FDR moved steadily to the Left: “Viewed in retrospect, Roosevelt’s course seemed to many a sudden and massive shift leftward, away from the via media of the first two years to a commanding position on the left. . . The Court’s decision made impossible the resurrection of the code features that had been the NRA’s attraction for certain business and industrial groups. The result of this situation was that merely carrying on the prolabor elements of the NRA meant a leftward shift.”

If the Supreme Court strikes down Obamacare, I expect Obama will follow in FDR’s grooves.